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                                                        Calendar No. 55
109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-40

======================================================================
 
NORTHERN ARIZONA LAND EXCHANGE AND VERDE RIVER BASIN PARTNERSHIP ACT OF 
                                  2005

                                _______
                                

                 March 16, 2005.--Ordered to be printed

                                _______
                                

   Mr. Domenici, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 161]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 161) to provide for a land exchange in 
the State of Arizona between the Secretary of Agriculture and 
Yavapai Ranch Limited Partnership, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                         PURPOSE OF THE MEASURE

    The purpose of S. 161 is to provide for a land exchange in 
the State of Arizona between the Secretary of Agriculture and 
Yavapai Ranch Limited Partnership.

                          BACKGROUND AND NEED

    Located at the north end of the Prescott National Forest 
the Yavapai Ranch covers approximately 170 square miles in 
north-central Arizona. The Forest Service and the ranch owner, 
Yavapai Ranch Limited Partnership (YRLP), currently own 
alternate square-mile sections of the ranch in ``checkerboard'' 
land ownership pattern. The Vavapai Ranch is the last large 
mixed-ownership pattern in Arizona.
    The land exchange authorized in S. 161 would consolidate 
the checkerboard so that both the Forest Service and YRLP would 
have more manageable lands in the future. Under the exchange, 
YRLP will convey approximately 35,000 acres (approximately 55 
square miles) to the Forest Service. This will enable the 
Forest Service to block up approximately 110 square miles of 
land (totaling over 70,000 acres) into Forest Service ownership 
for permanent public use and enjoyment. The lands to be 
acquired by the Forest Service include significant stands of 
old growth ponderosa pine and alligator juniper trees, 
important undeveloped habitat for pronghorn antelope and other 
wildlife and a portion of the upper watershed of the Verde 
River. Additionally, the land being consolidated into Forest 
Service ownership lies adjacent to the Juniper Mesa Wilderness 
area, and comprises largely undeveloped and open space. S. 161 
also addresses future water use. The exchange will reduce the 
subdividable and developable land base in the upper Verde River 
watershed (Big Cheno aquifer) by roughly 20,000 acres and 
thereby protect water resources and flows.
    In return for receiving the 35,000 acres of the Yavapai 
Ranch holdings, the Forest Service will convey to the Yavapai 
Ranch: (1) approximately 15,300 acres of land on the ranch 
checkerboard which is generally of lesser value than that 
acquired by the Forest Service; and (2) approximately 5,900 
acres in or near the communities of Flagstaff, Williams, Camp 
Verde, Clarkdale, Cottonwood, and Prescott. Many of the lands 
being conveyed to the Yavapai Ranch in those communities are 
currently encumbered by Forest Service special use permits for 
municipal airports, water and sewage treatment facilities, 
parks, a golf course and other municipal or summer camp uses. 
Those lands will be transferred from Yavapai Ranch to the 
municipalities and summer camps so that they can own and use 
the lands they currently lease for the Forest Service.
    In terms of the exchange process, the land exchange 
directed by S. 161 requires: (1) fair market value appraisal 
standards (the Uniform Standards of Appraisal for Federal Land 
Acquisitions and the Uniform Standards of Professional 
Appraisal Practice); (2) formal review and approval of all 
appraisals by the Secretary of Agriculture; (3) completion of 
standard surveys, inventories, clearances and approvals 
relating to threatened and endangered species, cultural and 
historic resources, hazardous materials, and wetlands and 
floodplains; and (4) traditional title reviews and analyses, 
which must be approved by the Forest Service. These 
requirements are all preconditions toconsummation of the 
exchange.
    Finally, S. 161 requires that the lands ultimately 
exchanged will be of equal value, either by making adjustments 
in the Federal and non-Federal lands exchanged, or through cash 
equalization.

                          LEGISLATIVE HISTORY

    S. 161 was introduced by Senator McCain for himself and 
Senator Kyl on January 23, 2005. A similar bill (S. 849) was 
introduced in the 108th Congress by Senator McCain and Senator 
Kyl on April 9, 2003. The Subcommittee on Public Lands and 
Forests held a hearing on S. 849 on September 11, 2003 (S. Hrg. 
108-196). The Senate passed S. 849 as an amendment to H.R. 620 
(S. Amdt. 4048) by unanimous consent on December 7, 2004. 
Congressman Renzi sponsored a companion measure, H.R. 2907, 
which passed the House of Representatives by a voice vote on 
October 18, 2003. The bill was not acted on in the Senate.
    A similar measure (H.R. 5513) was introduced by 
Representative Hayworth and others in the 107th Session of 
Congress. The House Resource Subcommittee on Forest and Forest 
Health held a hearing on H.R. 5513 on October 10, 2002. On 
November 11, 2002, the House of Representatives discharged, 
with an amendment, H.R. 5513 by unanimous consent. The House of 
Representatives passed the bill by unanimous consent on 
November 15, 2002. The Senate did not take up the bill before 
the close of the 107th Congress.

                        COMMITTEE RECOMMENDATION

    The Committee on Energy and Natural Resources, in an open 
business session on February 16, 2005, by a unanimous vote of a 
quorum present, recommends that the Senate pass S. 161, if 
amended as described herein.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides the short title and the table of 
contents for the Act.

                TITLE I--NORTHERN ARIZONA LAND EXCHANGE

    Section 101 definition of key terms used in the Act.
    Section 102(a) directs the Secretary of Agriculture to 
convey Federal lands identified in section 104 to Yavapai Ranch 
upon receipt on Yavapai Ranch's conveyance of non-Federal lands 
to the Secretary. Title to the lands to be exchanged shall be 
in a form acceptable to the Secretary and Yavapai Ranch and may 
be modified as provided in this Act. Minor technical 
corrections to the maps and legal descriptions may be made, if 
mutually agreed to. If a discrepancy exists between the maps 
and legal description, the maps shall prevail, unless the 
Secretary and Yavapai agree otherwise.
    Subsection (b) provided that the exchange shall be carried 
out in accordance with the Federal Land Policy and Management 
Act. All land surveys, pre-exchange inventories, clearances, 
reviews, and approvals, including those related to hazardous 
material, threatened and endangered species, cultural and 
historic resources and wet lands and flood plains, must be 
completed prior to the exchange.
    Subsection (c) requires that the value of the lands to be 
exchanged be equal and includes a list of properties to be 
deleted if the final appraisal values are not equal.
    Subsection (d) requires the value of the lands to be 
exchanged to be determined by uniform appraisal standards. For 
a three-year period following the Secretary's approval of the 
final appraisal values, the Secretary shall not be required to 
reappraise or update the appraisal values prior to the 
completion of the land exchange. The appraiser shall determine 
the value of each parcel of Federal and non-Federal land as an 
assembled transaction. The Secretary is directed to provide 
public notice of the approved appraisals and to provide copies 
of the appraisals to the cities and owners of camps described 
in section 101(1).
    Subsection (e) authorizes the Secretary to allow Yavapai 
Ranch to contract independent third parties to complete work 
necessary to complete the exchange and directs the Secretary to 
reimburse Yavapai Ranch for the cost of the third-party 
contractors.
    Subsection (f) provides that the exchange shall be subject 
to easements, rights-of-way or other valid encumbrances in 
existence on the date of enactment.
    Subsection (g) authorizes the owners of camps and cities to 
enter into agreements with Yavapai Ranch whereby Yavapai Ranch 
will convey the affected parcel to the camps or city at the 
conclusion of the land exchange. If the cities and camps and 
the Yavapai Ranch have not signed the agreements 30 days after 
appraisals have been made public, the Secretary is directed to 
delete the parcels from the exchange and offer them for sale to 
the respective cities or camps.
    Paragraph three directs the Secretary to convey all rights 
and title to the deleted parcels for fair market value to the 
specified camp or city. The owners of the deleted parcels are 
required to reimburse Yavapai Ranch for costs incurred directly 
associated with surveys and appraisals upon receipt of title to 
Federal lands.
    The Secretary is to deposit the proceeds of the sale of 
parcels in the Sisk Act account to be expended for acquisition 
of land in the State of Arizona.
    Section 103(a) describes 35,000 acres of non-Federal lands 
to be exchanged.
    Subsection (b) lists easements reserved by Yavapai Ranch, 
including water rights, wells, storage tanks, and pipelines, as 
well as 40 acres around each of three identified wells. The 
subsection provides that the United States shall be entitled to 
one half of the production of the 3 wells, up to 3.1 million 
gallons of water annually, and describes the location of the 
easements on the referenced map.
    Section 104(a) describes the 19,465.76 acres of Federal 
lands on the Prescott, Coconino, and KaibabNational Forests to 
be exchanged, as depicted on a series of maps.
    Subsection (b) authorizes the Secretary to enter into a 
memorandum of understanding with the State of Arizona, or a 
political subdivision of the State, to enforce the terms of 
conservation easements that prohibit the current or future 
owners of the Camp Verde General Cook parcel (one of the 
parcels to be conveyed to Yavapai Ranch) from golf course 
development, requires that any green-belt or public park be 
watered with treated wastewater, be limited to not more than 
300 acre-feet of water per year, and that any water used for 
the parcel not be withdrawn from wells perforated in the 
saturated Holocene alluvium of the Verde River.
    Section 105 contains several provisions concerning the 
management of the non-Federal lands being acquired by the 
Secretary, including direction on grazing, timber harvesting, 
and forest health projects.
    Section 106 directs the Secretary to revoke existing public 
orders on Federal lands to be exchanged; withdraws Federal 
lands to be conveyed from all forms of entry and appropriation 
under the public land, mining, and mineral leasing laws until 
the exchange is completed; and states that it is the intention 
of Congress that the exchange be complete within 18 months 
after enactment of the Act.
    Section 107 directs the Secretary to convey, by quitclaim 
deed, a small parcel of land in Coconino County to correct a 
minor boundary conflict between several adjacent landowners and 
the national forest boundary. The land is to be sold for $2,500 
to a person representing a majority of the affected landowners.

                TITLE II--VERDE RIVER BASIN PARTNERSHIP

    Section 201 describes the purposes of the title.
    Section 202 defines the terms used in the title.
    Section 203 authorizes the Secretary to participate in the 
establishment of the Verde River Basin Partnership and 
authorizes the Secretaries of Agriculture and the Interior to 
be appropriated such sums as are necessary to carry out the 
activities of the Partnership for fiscal years 2006 through 
2010. The purpose of the Partnership is to coordinate and 
cooperate in the identification and implementation of 
comprehensive science-based policies, projects and management 
activities relating to the Verde River Basin in Arizona.
    Section 204 describes the work and studies to be completed 
by the Partnership and directs the studies be transmitted to 
the Secretary of Agriculture, the Governor of Arizona and 
representatives of Verde Valley communities within 16 months 
after enactment of the Act.
    Section 205 describes the contents to be included in the 
final report to be transmitted to the Secretary and Governor of 
Arizona not later than 4 years after the enactment of the Act.
    Section 206 directs the Secretary of the Interior and the 
Secretary of Agriculture to enter into a memorandum of 
understanding to allow the United States Geological Survey to 
access Forest Service land to carry out this title of the Act.
    Section 207 clarifies that nothing in this title diminishes 
or expands State or local jurisdiction, or rights with respect 
to water resource management or control.

                   COST AND BUDGETARY CONSIDERATIONS

    The Congressional Budget Office estimate of the costs of 
this measure has been requested, but was not received at the 
time the report was filed. When the report is available, the 
Chairman will request it to be printed in the Congressional 
Record for the advice of the Senate.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 161.
    The bill is not a regulatory measure in the sense of 
imposing Government-established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 161, as ordered reported.

                        EXECUTIVE COMMUNICATIONS

    The views of the Administration were included in testimony 
received by the Committee at a hearing on S. 849 in the 108th 
Congress on July 21, 2004, as follows:

     Statement of Mark Rey, Under Secretary, Natural Resources and 
          Environment, United States Department of Agriculture

S. 849--the Northern Arizona National Forest Land Exchange Act of 2003
    The Department supports the concept of a land exchange 
between Yavapai Ranch Limited Partnership, the Northern 
Yavapai, L.L.C. and the Forest Service, which would consolidate 
the largest remaining checkerboard ownership in Arizona. We do 
however, have some concerns related to the parcel deletion 
order and enforcement provisions associated with the 
conservation easements and would like to work with the 
committee on some clarifications.
    S. 849 would authorize the exchange of approximately 55,000 
acres of Federal and non-Federal land in the State of Arizona 
between the Secretary of Agriculture and Yavapai Ranch Limited 
Partnership. Pass-through provisions allow for some of the 
Federal land acquired by Yavapai Ranch Limited Partnership and 
the Northern Yavapai L.L.C. to be reconveyed to the cities of 
Flagstaff, Williams, and Camp Verde, Arizona, or to summer 
organizational camps identified in the bill.
    This exchange can offer substantial benefits to all parties 
involved. The Forest units involved would benefit from 
simplified boundary management, reduced administrative costs, 
and the acquisition of lands adjacent to the Juniper Mesa 
Wilderness, which has significant forest, wildlife, and 
recreation values. Consolidating 110 square miles into solid 
Forest Service ownership is a significant gain from both 
administrative and resource standpoints.
    The Department has suggestions to improve one section in 
the bill. Section 4 in S. 849 establishes conservation 
easements on the Camp Verde and Cottonwood parcels. These 
parcels are located on the Prescott National Forest. S. 849 
needs greater detail concerning: (1) how a memorandum of 
understanding with the State of Arizona will be developed to 
enforce the conservation easements; (2) when the memorandum 
will take effect and for how long; and (3) how the Federal 
Government will be removed from liability. We would be happy to 
work with the committee and the bill authors to provide 
additional details.
    In addition, the Department is concerned that the 
evaluation of the Federal parcels due to the conservation 
easements could result in the transfer of far more Federal land 
to the owners of the Yavapai Ranch and its related limited 
liability corporation than would otherwise occur if the market 
value of the Federal estate were fully and fairly valued, but 
the Federal government will hold these conservation easements 
in perpetuity.

           *       *       *       *       *       *       *



                        changes in existing law


    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill S. 161, as ordered 
reported.